Columns

The notion of fortuity is a central underpinning of insurance. Intuitively, we understand that it would be difficult to purchase insurance for an accident that has already happened, and even if such insurance were somehow to be made available, that by definition it would be impossible to price it. Whether faulty workmanship that results in construction defects can be considered an “occurrence” under a comprehensive general liability (CGL) policy strikes at the essence of insurance. If insurance is intended to protect insureds against losses from accidents, then an insured contractor who is sued for unintended damage because of accidental faulty workmanship should arguably be covered for such loss. But can damage from faulty workmanship ever be considered accidental if the work provided by the contractor was completed as intended and loss flowing from poor workmanship inevitable? This question continues to fuel litigation over whether and to what extent insurance should cover construction defects. A divergence of opinion has also led at least four states – Arkansas, Colorado, Hawaii and South Carolina – to enact legislation on the point.

Construction companies are helping to rebuild the global economy. While the west views the renewal of its ongoing infrastructure as a catalyst for recovery – witness the infrastructure spending at the core of The American Recovery and Reinvestment Act, designed to re-start the economy – the east views infrastructure construction as a key tool for growth.

Certainly, infrastructure can be a key factor in determining a country or region’s economic competitiveness. Construction companies are, of course, a vital element to the core infrastructure that shapes and defines urban landscapes – metro lines, skyscrapers, stadiums, universities, airports and other physical geology – and, as a result, contribute directly to the growth of a city. Having this infrastructure gives developed markets an advantage in terms of their physical assets and is, in part, the reason they are deemed ‘developed’.

For construction contractors who spend a great deal of time in the field, having access to important documents and software programs on demand from any location can help them run their businesses just as easily as if they were in the office every day. That’s why many contractors are making the move to “the cloud,” which means storing all data and software in a third-party location so that it can be accessed via the Internet rather than storing the information on servers at company facilities.

As the construction trades continue to bounce back from the severe recession and overhang of the housing market downturn, the U.S. Department of Labor (DOL) and business groups have been waging an important but overlooked battle over the future of the H-2B non-agricultural guest worker visa program.

On Feb. 10, 2012, the DOL’s Employment and Training Administration and Wage and Hour Division announced that it would issue a new regulation requiring employers that import foreign guest workers for seasonal positions to make a greater effort to recruit U.S. workers. Since then, the rule has become a hot button issue in both the federal courts and Congress. On April 23, a federal district court in Florida issued a temporary injunction against the implementation of the new regulation. Five companies, along with trade groups in the landscaping and forestry industries and the U.S. Chamber of Commerce, challenged the regulation on largely procedural grounds.

Equipment thieves are becoming more sophisticated, with an increased knowledge of where and when to look for valuable equipment that can be resold on the black market for a profitable return. According to the 2010 Equipment Theft Report, published jointly by the National Equipment Register and National Insurance Crime Bureau, 13,374 theft reports were filed in 2010, representing an increase of 162 percent from just five years earlier. Moreover, of all the reported stolen pieces of equipment in 2010, only 19 percent was recovered.

Disclaimer: This article is for informational purposes only and not for the purpose of providing legal advice.

A construction site is a complex, dynamic environment where contractors and subcontractors construct the vision of the developer, investors and owners, as well as the plans of architects, engineers and other professional consultants.

The construction site environment is not just physically or logistically complex, but also is complex by way of the contractual relationships that exist among the parties responsible for construction. Certainly, all parties participating in any development want to be properly and fully insured for all potential risks or exposures, but even when everyone is insured, accidents happen. It is important to know that any time there is an injury or accident during construction, be it a workers’ compensation, builders’ risk or injury to the general public, the insurance companies look to the signed contracts to see who will pay it.

Many large residential and commercial contracting companies have long-standing practices in place to ensure quality construction in a safe building environment. They employ well-trained project managers, host regular safety briefings and assign people specifically to conduct quality control inspections and enforcement. These same contracting companies typically work on projects of significant size where they must award jobs to very large subcontracting companies. Hence, they are employing companies with similar safety and quality practices already in place.

For the small general contractor, associated specialty trades and architecture and engineering firms, the past several years have been brutal. That said, small construction companies have a niche market and a distinct competitive advantage when they possess small business certifications. These certifications have value, whether work is “set aside” as a prime contractor or as a subcontracting goal on federal government construction projects.  Following are some of the common small business certifications and set-aside contracting programs that your construction firm may wish to pursue:

  • The 8(a) Business Development Program was created to help U.S. social and economic disadvantaged small businesses compete in the federal marketplace. Qualifying businesses must provide financial and corporate documents and submit an application via the Small Business Administration (SBA).
  • HUBZone Program encourages economic development in historically underutilized business zones or “HUBZones.” To qualify for the program, your firm’s principal office must be located in a HUBZone, and at least 35 percent of your employees must reside in a HUBZone. Qualifying firms must submit an online application and supporting documents via­­ the SBA.
  • 8(m) Program allows federal agencies to set aside contracts specifically for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB). To qualify, at least 50 percent of your firm must owned by a woman. She must have the highest officer position, maintain control of the business and manage the day-to-day operations. Qualifying firms can self-certify simply by declaring your WOSB/EDWOSB status in System for Award Management (SAM) and uploading your corporate and financial documents in the SBA’s General Login System.
  • Service-Disabled Veteran-Owned Small Business Procurement Program provides federal contracting assistance to service-disabled veteran-owned small business concerns. Qualifying businesses are at least 51 percent owned by veterans disabled by a service-related injury. Similar to women-owned certification, you can self-certify in SAM. You may also validate your service-disabled veteran status by completing an online application with the Veterans Administration. When you self-certify, you are still responsible for understanding the regulations and limitations that apply to your business.
The Perfect Customer

The U.S. government is the world’s largest customer, spending  more than $56 billion on construction in fiscal year 2011. This customer reserves a significant portion of its purchasing specifically for companies just like yours and mine and teaches you how to earn and maintain this business.  Obtaining small business certifications of any type is the differentiator in a competitive environment.

Each year, the federal government establishes procurement goals ranging from three to five percent of the total federal budget for small businesses possessing one or more of these certifications. According to the SBA’s procurement scorecard for 2011, the federal government, despite efforts to obtain these goals, missed the mark in four of five categories. This means billions of dollars designated for certified small businesses are being spent elsewhere.

Bigger Does Not Mean Better

There is a misconception that only large businesses have the resources to compete for government contracts. More than 25 percent of total federal government purchasing is directly set-aside or sole source for small businesses. This percentage does not even consider the additional requirements the government imposes on large business to subcontract a portion of its work to qualified small business. Subcontracting opens up a whole other avenue of opportunities for small business.

There are additional advantages to the various small business certifications. For example, HUBZone-certified companies may enjoy a 10 percent price evaluation preference in full and open contract competitions. If your company is certified as 8(a) business, you enjoy the benefits of a business development program courtesy of the SBA and are able to receive sole-source non-competitive bids up to $4 million.

Just Do It

Athena Construction Group had a rough start in 2003 amid significant financial losses. Instead of closing shop, we decided to take bold and decisive action – transitioning out of residential remodeling services to pursue federal work. By getting certified as a SDVOB, WOB or HUBZone construction company and aggressively marketing these certifications, we started to land subcontracting, prime contracting and teaming work, grow through the recession and hire new employees. Today, 90 percent of our revenues are generated through government contracts, and companies now call us regarding opportunities.

Right now, the country needs jobs, and small businesses create jobs. Remember, there is a huge amount of money that is left on the table because there aren’t enough qualified certified small businesses to fulfill the government’s procurement needs. It has to begin somewhere, so take the lead – it’s good for your business and our country.

Current Issue

Check out our latest Edition!

 

alan blog ct

Contact Us

Construction Today Magazine
150 N. Michigan Ave., Suite 900
Chicago, IL 60601

  312.676.1100
  312.676.1101

Click here for a full list of contacts.

Latest Edition

Spread The Love

Back To Top